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Home Buying Process

Home Buying FAQ

What is the first step in buying a home?

The first step is to qualify for a mortgage with a good lender. Qualifying first is an important step in determining an affordable price range, down payment needed, monthly mortgage and closing costs.

What should I look for in choosing a lender?

Choose a lender who is accessible and available to you. A good lender is an effective communicator. S/he will take time to explain the various programs and recommend options that fit your needs. While interest rates are important, service is critical. Take time to understand the loan terms and conditions. We work with many trusted lenders and can recommend one best suited for your situation.

Why buy?

It’s a great time to buy a house in Maryland if you have the financial means. Sellers are motivated to price their homes to sell quickly and interest rates remain historically low. The Eastern Shore is a great destination whether you’re in the market for a primary, vacation or retirement home. Waterfront property is in high demand and the Shore has many styles, prices and communities to choose from.

What are the most important steps to take before I buy a home?

  • Improve your credit score
  • Increase your household savings
  • Be prepared to make a down payment of at least 3-5% of the sales price

What is a “first time” homebuyer?

To be eligible for financing programs for first-time homebuyers, most Maryland lenders follow the federal government’s definition of: “An individual who has not had an ownership interest in a principal residence (anywhere) for the previous three years.” Individuals who are separated or divorced and had a real property interest during the previous three years may be eligible if they did not live in the property during that time. Check with your lender for other conditions. First-time buyers who’ve never owned a principal residence are entitled to a one-time waiver of the State’s portion of transfer taxes at settlement.

What is a “buyer’s agent”?

A “Buyer’s Agent” is a licensed real estate agent who represents only the buyer’s interests during the sales process. A buyer’s agent works on behalf of their client to: locate and evaluate properties, prepare offers, and negotiate the terms. Once a seller accepts an offer, the Buyer’s Agent continues to facilitate the transaction for their client through settlement. In Maryland, the Buyer’s Agent commission is typically paid at closing by the Seller. A written agreement between the Buyer and agent is required to establish this representation.

What is the difference between down payment and closing costs?

A down-payment is calculated as a percentage of a home’s purchase price. Lenders require borrowers to invest a portion of the purchase price to ensure the borrower’s willingness to make an equity commitment. Most mortgages require a minimum down-payment of three to five percent; some are as high as 20% depending upon the loan type and terms. The balance of the purchase price is financed by borrowing the funds needed through a mortgage. The down-payment is paid at closing. Closing costs and non down payment costs that paid at settlement include: Property taxes, state and county fees, lender fees, and first year’s hazard insurance. Although closing costs can be substantial, the Buyer can negotiate a contribution towards the closing costs from the Seller, depending upon the terms of the mortgage and the lender’s policy.

What is APR and why is it different than the interest rate on my mortgage loan?

APR is the Annual Percentage Rate. The number informs consumers of a loan’s total cost, expressed as a yearly percentage rate. APR takes the total cost of credit into account (including the interest rate and all lender fees financed over the term of the loan). APR is never lower than – and is usually higher than – the stated or advertised interest rate on the mortgage. Within reason, the APR is a tool that allows you to compare different types of mortgages based on their total cost.